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The Health Wrap: affordable medicine, mental health spending, social missions, Indigenous health and more

In the latest Health Wrap, Dr Lesley Russell takes a deep dive into whether the Federal Government is meeting its promise to provide more affordable medicines, seeking to get behind the paywalls that obscure how funds allocated to the PBS are spent.

She also drills into the latest figures on mental health spending from the Australia Institute of Health and Welfare, and provides an important and timely update on the work of the late Dr Fitzhugh Mullan, Professor at George Washington University, on the social mission record of American’s 141 medical schools, and how this approach might apply in dentistry.

And as promised, she finishes with a good news story – this one in Aboriginal and Torres Strait Islander health: the release by the Coalition of Peaks of their Engagement Snapshot which is guiding work towards a new Close the Gap partnership with Australian governments.


Lesley Russell writes:

Health Minister Greg Hunt and his colleagues spend a lot of time pushing the fact that their sound fiscal management means new medicines are constantly being added to the Pharmaceutical Benefits Scheme (for example, the 2019 Budget promised to provide “more affordable medicines through record health funding”), but there is little public examination of what this really means and how funds allocated to the PBS are really spent.  The situation is aggravated because what little discussion there is generally takes place in medical and pharmaceutical publications behind paywalls.

Here is an effort to dig out some of the issues.

Affordable access to prescription medicines

PBS expenditure is barely growing

The 2019 Budget Papers (No 1, Table 8.2) show that the Government expects PBS expenses to decrease by 18.6 percent in real terms over the forward estimates, due largely to special pricing arrangements for some of the most expensive drugs (and, presumably, the fact that co-payments will continue to rise).

Estimated expenditure for 2018-19 was given as $12.731 billion, but analysis (paywall) shows it was considerably less than this ($11.818 billion), even when revenue was excluded. This was an increase of just 1.1 percent compared with 2017-18. The volume of subsidised prescriptions rose marginally, to 205.1 million in 2018-19 from 204.1 million in 2017-18.

Perhaps the most interesting figure is the average dispensed price (patient payment plus government benefit) per prescription of PBS subsidised medicines. This was $64.33 in 2018-19, up from $64.04 in 2017-18. While I’m not smart enough to disentangle all the financial information here, given that in 2019 the patient co-payments were $40.30 for general and $6.50 for concession card patients (the majority of prescriptions), the Government’s costs averaged less than $60 per script for concession card scripts (the majority of scripts filled), and about $20 for general scripts .

Could we get a better deal?

There were 900 different medicines in 5,455 brands listed on the PBS as at June 30, 2019. This makes me wonder if a little more price competition could be generated. This question was posed in 2017 by Professor Stephen Duckett at the Grattan Institute in a report Cutting a Better Drug Deal, which  showed how patients and taxpayers could save around half a billion dollars a year if the federal government reformed PBS pricing practices. In a later article, Duckett highlighted how this would work.

Transparency around the Seventh Community Pharmacy Agreement

Over 30 percent of the PBS goes to the Community Pharmacy Agreement (CPA) under which pharmacists are funded for delivering prescriptions and advice to consumers and for a series of programs and pilots around improving primary care services. The current, 6th CPA expires June 30 this year and negotiations for the 7th CPA have been underway for some time. There is little or no transparency around this and the billions of dollars involved. I wrote about how politically powerful the Pharmaceutical Guild is in this recent article for The Conversation.

Supply problems

Despite all the guarantees around the PBS, the ready availability of a number of medicines listed on the PBS, especially older generic drugs, is becoming an increasing problem. This is aggravated as more pharmaceutical companies are closing their manufacturing plants in Australia and where the global consolidation of the industry makes supply chains vulnerable (Australia imports 90 percent of its medicines). 

In a 2017 survey of Australian hospitals the five most common medicines in short supply were antibiotics, anaesthetics, cardiology drugs, endocrinology drugs and chemotherapy. Such shortages can have a significant impact on patient care with little or no notice. In 2018 there was a shortage of the EpiPen device. Vaccines and even sterile water for injections have been in short supply.

In 2014, the Therapeutic Goods Administration established the Medicines Shortage Information Initiative –  a voluntary sponsor reporting scheme. However, this initiative has had major failings: some critical shortages are not reported and few clinicians are aware of the initiative. Generally prescribers and patients only become aware of a shortage when they are informed by a community pharmacist at the time of getting a script filled or when hospitals receive notification from a wholesaler after placing an order.

We might ask the Government what is being done to ensure that supplies of essential medicines and medical products are always available. The current coronavirus outbreak highlights perfectly how dependent Australia is on needed medicines and medical equipment (antibiotics, antivirals, facemasks, gloves) that are manufactured overseas.

Addressing medicine-related harms

In a statement of the Morrison Government’s 2019 election commitments made to the Pharmaceutical Society of Australia (PSA), Health Minister Hunt outlined efforts to address medicine-related harms, including working with the Council of Australian Governments (COAG) to declare quality use of medicines and medicines safety a National Health Priority Area.

This was agreed at the November 2019 COAG Health Council meeting. Hopefully this work will also address pain management and the national opioid crisis – a situation that is now described as “out of control”.

Review of the National Medicines Policy

In the statement to the PSA referred to above, the Health Minister also announced a review of Australia’s National Medicines Policy (NMP). This policy was introduced in 1999 and has not been updated since. Much has changed in this space and there have been growing calls for its update.

The current policy focusses on four interconnected pillars:

  • Timely access to medicines that are affordable to individuals and the community.
  • High-quality medicines that are safe and effective.
  • The quality use of medicines.
  • Maintenance of a viable and responsible medicines industry.

However progress on implementing this review is slow and apparently it will not now start until March 2020.  The references I have seen in industry publications suggest that the focus is very much on the business side of the issues rather than on addressing consumer/patient needs.

 A recent article in Australian Prescriber outlines what is needed in a National Medicines Policy 2.0. 

  • A patient-centred focus (especially for those who are frail, elderly, require multiple medications).
  • Improved systems to monitor and report medication safety.
  • Addressing cost and access, with the recognition that out-of-pocket costs are a barrier for many. Interestingly, there is also a statement about the need to ensure medicine supply, with shortages described as a “major challenge”.
  • Digital health initiatives such as MyHealthRecord, electronic medication management and real time prescription monitoring are now part of the scene – and hopefully will be more so in the future. There are also associated issues linked to data privacy and protection.
  • The need for improved stakeholder partnerships and cooperation.
  • The need for up-to-date legislation and regulatory frameworks to support the increasing complexity of therapeutic interventions and to protect the public from adverse events.

New look at mental health spending

Last month the Australian Institute of Health and Welfare released a report on mental health spending, covering the years 2017-18 and 2018-19. I suggest you read this (or my summary below) in conjunction with Jennifer Doggett’s excellent summary of the health section of the 2020 Report on Government Services by the Productivity Commission which was released last week. 

In 2017-18 the total spending on mental health services in Australia was $9.9 billion. This does not include disability support or the federal contribution to public hospital costs. I think it also does not include spending by the defence forces and Veterans’ Affairs and patients’ out-of-pocket costs.

My four big take-outs from this report are:

  1. Despite much fanfare from Prime Minister Scott Morrison and Health Minister Hunt, there has been little change in the proportion of federal government expenditure on mental health over the five financial years to 2017-18.
  2. Despite much fanfare from the private health insurance (PHI) funds, their proportion of the national expenditure on mental health has also seen little change over the same five years.
  3. The geographical workforce disparities are such that mental health inequalities are hard-wired into the system.
  4. We still know very little about the patient outcomes delivered from the $9.9 billion or more spent each year.

Even when assessed in the broadest terms, there is much to suggest that the current expenditures are not well targeted.

Federal spending

The Federal Government spend accounted for 33.9 percent of the total mental health spend (some $3.4 billion) in 2017-18. That’s about 4.4 percent of total federal spending on health ($77.1 billion in 2017-18). This is hardly proportionate to the burden of mental illness. About half of this was spent on Medicare-subsidised services (here the report switches to 2018-19 figures – $1.3 billion) and about a quarter on PBS medicines ($541 million in 2018-19). 

Of the Medicare funds, $580 million went to services provided by psychologists, and $372 million to services provided by psychiatrists. There is no information about the cost of GP-provided mental health services.  The average annual Medicare spend per patient was $51 but this varies substantially by state – from $57 in Victoria to $16 in the Northern Territory.

The federal spend on mental health services, adjusted for inflation, decreased from $139 per person in 2013-14 to $135 per person in 2017-18. (That’s a shock!) The report says this might be due to a decrease in the cost of some medicines. Expenditure per person is increasing for young people but decreasing for the elderly.

State and Territory spending

The States and Territories spend accounted for 60.6 percent of the total mental health spend (some $6.0 billion) in 2017-18. Of this, $2.6 billion was spent in public hospitals and $2.3 billion on community mental health services.

PHI funds spending

PHI spend accounted for 5.5 percent of the total mental health spend (some $550 million) in 2017-18. Almost all of this was spent on same day private hospital care.

Mental health workforce

The 2017 figures provided are pretty worrying, especially given what they mean for the delivery of mental health services outside of major metropolitan areas.  I am endlessly making the case for better workforce planning – and this certainly boosts that case.

In 2017 there were just 3,369 psychiatrists in Australia with 90 percent of these employed in the major cities (which have 71 percent of the population). There were 22,159 mental health nurses, with 64.2 percent of these employed in hospitals and only 21 percent in community health care services. There were 26,311 psychologists, 80 percent of whom were employed in the major cities.

Key Performance Indicators

While it’s clear some effort is being made to address the need for information about mental health outcomes, it’s also clear from this report there’s a long way to go. Data about the number of people getting services, costs and the average lengths of stay say little about patients. Currently the only significant measure is the proportion of episodes of care (in patient or day care) where patients show significant improvement. What these data mostly highlight is how significant numbers of patients (about a third) fail to complete their care.

The AIHW report provides some excellent data interactives that will be useful to people who work in mental health.

Suicide prevention – trying to guess the level of commitment

As an addendum, I should note the recent announcement from the Morrison Government of $64 million for suicide prevention and other mental health initiatives. This is described as “an early response” (is that code for “kneejerk reaction” over “strategy”?) to advice from the National Suicide Prevention Advisor Christine Morgan.

The media release does not specify the period over which the $64 million is committed – one year or four years?

Social accountability of doctors and dentists

I have long been interested in the questions around the social accountability of clinicians (especially in countries like Australia where they operate as private businesses but receive significant federal funding) and the social mission of the schools that educate and train them.

This approach owes much to the wonderful Dr Fitzhugh Mullan, Professor at George Washington University, who sadly died, much too young, just recently.

In 2010 he and his colleagues examined